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Why Is Invesco (IVZ) Down 17.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Invesco (IVZ - Free Report) . Shares have lost about 17.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Invesco due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Invesco Q4 Earnings Miss Estimates on Higher Expenses
Invesco reported fourth-quarter 2019 adjusted earnings of 64 cents per share, missing the Zacks Consensus Estimate of 70 cents. However, the bottom line surged 45.5% from the prior-year quarter.
Results reflect a rise in AUM balance and higher revenues, driven by the OppenheimerFunds buyout. However, increase in operating expenses and net outflows were the major headwinds.
On a GAAP basis, net income attributable to common shareholders came in at $179.8 million or 39 cents per share, up from $114.2 million or 28 cents per share a year ago.
The company’s 2019 adjusted earnings totaled $2.55 per share, lagging the consensus estimate of $2.61, but growing 4.9% year over year. On a GAAP basis, net income attributable to common shareholders came in at $564.7 million or $1.28 per share, down from $882.8 million or $2.14 per share in 2018.
Revenues & Expenses Rise
GAAP operating revenues in the quarter were $1.74 billion, increasing 38.8% year over year. However, the figure missed the Zacks Consensus Estimate of $1.75 billion. Adjusted net revenues jumped 37.9% to $1.27 billion.
In 2019, GAAP operating revenues were $6.12 billion, up 15.1% year over year and beat the Zacks Consensus Estimate of $6.06 billion. Adjusted net revenues jumped 15.6% to $4.42 billion.
Adjusted operating expenses were $762.3 million, up 23.1% from the prior-year quarter.
Adjusted operating margin was 39.9% compared with 32.6% a year ago.
AUM Improves
As of Dec 31, 2019, AUM was $1.27 billion, surging 38.1% year over year. Average AUM for the fourth quarter totaled $1.20 billion, up 29.9%. AUM growth was mainly driven by the closure of the deal to acquire OppenheimerFunds in May 2019 and strong equity markets performance.
Further, the December quarter witnessed long-term net outflows of $14 billion.
Share Repurchase Update
During the fourth quarter, Invesco repurchased shares worth $11 million.
As of 2019 end, the company repurchased $973 million worth of shares since announcing $1.2 billion buyback authorization in October 2018.
Outlook
The company expects 2020 quarterly expense run rate of $755 million. For full-year 2020, operating expenses are expected to be $3.02 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Invesco has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Invesco has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Invesco (IVZ) Down 17.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Invesco (IVZ - Free Report) . Shares have lost about 17.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Invesco due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Invesco Q4 Earnings Miss Estimates on Higher Expenses
Invesco reported fourth-quarter 2019 adjusted earnings of 64 cents per share, missing the Zacks Consensus Estimate of 70 cents. However, the bottom line surged 45.5% from the prior-year quarter.
Results reflect a rise in AUM balance and higher revenues, driven by the OppenheimerFunds buyout. However, increase in operating expenses and net outflows were the major headwinds.
On a GAAP basis, net income attributable to common shareholders came in at $179.8 million or 39 cents per share, up from $114.2 million or 28 cents per share a year ago.
The company’s 2019 adjusted earnings totaled $2.55 per share, lagging the consensus estimate of $2.61, but growing 4.9% year over year. On a GAAP basis, net income attributable to common shareholders came in at $564.7 million or $1.28 per share, down from $882.8 million or $2.14 per share in 2018.
Revenues & Expenses Rise
GAAP operating revenues in the quarter were $1.74 billion, increasing 38.8% year over year. However, the figure missed the Zacks Consensus Estimate of $1.75 billion. Adjusted net revenues jumped 37.9% to $1.27 billion.
In 2019, GAAP operating revenues were $6.12 billion, up 15.1% year over year and beat the Zacks Consensus Estimate of $6.06 billion. Adjusted net revenues jumped 15.6% to $4.42 billion.
Adjusted operating expenses were $762.3 million, up 23.1% from the prior-year quarter.
Adjusted operating margin was 39.9% compared with 32.6% a year ago.
AUM Improves
As of Dec 31, 2019, AUM was $1.27 billion, surging 38.1% year over year. Average AUM for the fourth quarter totaled $1.20 billion, up 29.9%. AUM growth was mainly driven by the closure of the deal to acquire OppenheimerFunds in May 2019 and strong equity markets performance.
Further, the December quarter witnessed long-term net outflows of $14 billion.
Share Repurchase Update
During the fourth quarter, Invesco repurchased shares worth $11 million.
As of 2019 end, the company repurchased $973 million worth of shares since announcing $1.2 billion buyback authorization in October 2018.
Outlook
The company expects 2020 quarterly expense run rate of $755 million. For full-year 2020, operating expenses are expected to be $3.02 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Invesco has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Invesco has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.